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Nigeria has resolved a 15-year legal battle with Italian energy giant ENI over one of the country’s largest undeveloped oil blocks, clearing the path for a project that could add 150,000 barrels daily to national production at a time when output has stagnated below targets for years.
President Bola Tinubu announced the settlement Wednesday after meeting ENI’s chief executive Claudio Descalzi and senior company officials in Abuja. The agreement ends disputes over Oil Prospecting Licence 245, a deepwater asset that has been mired in controversy since the mid-2000s but is considered among Nigeria’s most commercially promising offshore blocks.
The resolution allows ENI and its partner Shell to move toward a final investment decision on the Zabazaba-Etan field, which sits in waters more than 1,000 meters deep off the Niger Delta.
Development had been frozen while the federal government, ENI and Shell fought over the legitimacy of the original 2011 acquisition, which became entangled in corruption allegations and court battles spanning multiple jurisdictions.
Read also: Tinubu Settles Nigeria’s Largest Untapped Oil Block Dispute
Tinubu described the settlement as proof Nigeria can address legacy problems transparently and create stable conditions for long-term capital. He said resolving the dispute removes a major risk that had discouraged other investors from committing to large projects in the country’s upstream sector.
“This resolution sends a clear signal to global investors that Nigeria is prepared to address legacy issues transparently, uphold the rule of law, and create a stable environment for long-term capital,” Tinubu said.
Olu Verheijen, the president’s energy adviser, said the new terms improve on the 2011 arrangement and reflect the Petroleum Industry Act, the regulatory overhaul enacted in 2021 after decades of delay.
She said the revised agreement balances investor needs for predictability with stronger protections for federal revenue.
The settlement is part of broader reforms Tinubu’s administration has pursued since taking office in 2023 to reverse years of underinvestment in Nigeria’s oil and gas industry. Production has hovered around 1.3 million barrels per day, far below the country’s capacity and trailing rival producers Angola and Libya despite Nigeria’s larger reserves.
Renewed interest from international companies has followed changes to fiscal terms and efforts to resolve disputes that froze projects worth billions of dollars. Capital inflows into the sector have increased, though it remains unclear whether momentum can be sustained if global oil prices weaken or if regulatory uncertainty returns.
Read also: Tinubu Proposes GAMCO To Fix Nigeria’s Electricity Bottleneck
OPL 245 covers roughly 1,900 square kilometers and holds an estimated nine billion barrels of crude, making it one of Africa’s largest offshore discoveries. The block changed hands multiple times between the 1990s and 2011, when ENI and Shell paid $1.3 billion to acquire it from Malabu Oil and Gas, a company controlled by former petroleum minister Dan Etete.
Italian and Nigerian prosecutors later accused executives from both companies of paying bribes to secure the deal, triggering criminal cases in Milan and Abuja. Courts in Italy acquitted the executives in 2021, but legal disputes over the block’s ownership continued in Nigeria, preventing development.
Under the settlement announced Wednesday, the terms governing ENI’s stake have been adjusted to comply with the Petroleum Industry Act, which introduced new royalty structures and profit-sharing arrangements. Verheijen said the changes ensure the federal government captures more value from the asset while giving ENI and Shell the clarity they need to proceed.
She did not specify financial details or describe what penalties, if any, were imposed as part of the resolution. A presidential statement said only that the agreement reflected improvements over the 2011 terms and aligned with current policy frameworks.
The Zabazaba-Etan development will require construction of subsea infrastructure, pipelines and processing facilities. First oil is not expected for several years even if a final investment decision is reached soon, as deepwater projects typically involve long lead times and substantial upfront costs.
Nigeria depends on oil revenue for roughly half its federal budget, and production declines over the past decade have strained public finances. Theft, pipeline sabotage and underinvestment in aging infrastructure have contributed to output falling below two million barrels per day, a level the country last sustained consistently more than a decade ago.
Tinubu has prioritized reviving the sector, removing fuel subsidies and overhauling foreign exchange policies that discouraged investment. The administration has also pushed to finalize pending projects and resolve disputes that tied up assets for years without producing revenue.
ENI operates multiple assets in Nigeria and has been active in the country’s oil industry for decades. Shell, which holds a smaller stake in OPL 245, has been divesting onshore holdings while retaining deepwater positions it considers more profitable and less vulnerable to theft.
Wednesday’s agreement involved the attorney general’s office, the petroleum ministry, the Nigerian Upstream Petroleum Regulatory Commission and NNPC Limited, the state oil company.
Tinubu commended those institutions for contributing to the settlement.
Whether the resolution will encourage other companies to commit capital to disputed or stalled projects depends partly on how consistently Nigeria enforces the new regulatory framework and whether future governments honor agreements reached under Tinubu.
Investors have historically cited policy reversals and contract instability as major risks in Nigeria’s energy sector, concerns that have driven some international companies to exit or reduce exposure despite the country’s resource potential.
